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Can Google ETFs Keep Gaining on Q2 Earnings Optimism?
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Google-parent Alphabet (GOOGL - Free Report) recently reported second-quarter 2021 results, with earnings and revenues topping estimates and increasing on a year-over-year basis. Notably, Alphabet’s share price has surged about 3.2% since the release of the impressive earnings results on Jul 27.
Q2 Earnings at a Glance
Earnings per share were $27.26, surpassing the Zacks Consensus Estimate by 37.1% and increasing 169.1% year over year. Revenues totaled $61.9 billion, rising 62% year over year (57% at constant currency). Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website), stood at $50.95 billion.
Net revenues surpassed the Zacks Consensus Estimate by 10.6%, largely on strong performances by the company’s search, advertising, cloud and YouTube businesses. Rise in online activities across the world also remained a tailwind.
Alphabet’s business segments include Google Services, Google Cloud and Other Bets. Revenues from the Google Services business rose 63.1% year over year to $57.1 billion, accounting for 92.3% of the reported quarter revenues. Under the services business, search revenues from Google-owned sites climbed 68.1% year over year to $35.8 billion. YouTube advertising revenues rose 83.7% year over year to $7 billion, while Network advertising revenues climbed 60.4% to $7.6 billion.
Google other revenues — which consists of Google Play and YouTube non-advertising revenues — were $6.6 billion for the quarter under review, up 29.3% year over year. Total Google advertising revenues grew 68.9% year over year to $50.4 billion.
Moreover, Google Cloud revenues grew 53.9% year over year to around $4.6 billion, making for 7.5% of the second-quarter revenues. Notably, with the aggravating coronavirus situation, some industries like cloud computing have been thriving with majority of people working from home. Other Bets revenues were $192 million, up 29.7% year over year, accounting for 0.3% of total quaterly revenues.
Meanwhile, TAC was up 63.3% year over year to $10.9 billion.
Commenting on the results, Sundar Pichai, CEO of Google and Alphabet, reportedly said, “in Q2, there was a rising tide of online activity in many parts of the world, and we’re proud that our services helped so many consumers and businesses. Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone’s digital experience.”
ETFs in Focus
The earnings results might have a huge impact on ETFs that are heavily invested in this Internet giant. Here we have highlighted four ETFs with double-digit exposure to Alphabet (see: all the Technology ETFs here).
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 116 stocks in its basket, Alphabet takes the second (Class C) and third (Class A) spot, with 11.09% and 11.05% share, respectively. VOX has AUM of $4.62 billion and charges 10 basis points (bps) in annual fees.
It has gained 0.8% since Alphabet's second-quarter earnings release. The fund has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: ETFs to Gain on Biden's Infrastructure Deal).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 113 stocks in its basket, with Alphabet occupying the second (Class C) and third position (Class A) at 11.22% and 11.18%. The product has amassed $921.9 million in its asset base and charges 8 bps in annual fees.
The Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $14.41 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.30% and 12.08% weights, respectively. The product charges 12 bps in annual fees.
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 68 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.24% and 12.02% weights, respectively. The fund has amassed $333.2 million in its asset base. Its expense ratio came in at 0.46%.
The fund has gained 0.9% since the earnings release. IXP has a Zacks ETF Rank #3, with a Medium-risk outlook.
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Can Google ETFs Keep Gaining on Q2 Earnings Optimism?
Google-parent Alphabet (GOOGL - Free Report) recently reported second-quarter 2021 results, with earnings and revenues topping estimates and increasing on a year-over-year basis. Notably, Alphabet’s share price has surged about 3.2% since the release of the impressive earnings results on Jul 27.
Q2 Earnings at a Glance
Earnings per share were $27.26, surpassing the Zacks Consensus Estimate by 37.1% and increasing 169.1% year over year. Revenues totaled $61.9 billion, rising 62% year over year (57% at constant currency). Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amount paid to distribution partners and others who direct traffic to the Google website), stood at $50.95 billion.
Net revenues surpassed the Zacks Consensus Estimate by 10.6%, largely on strong performances by the company’s search, advertising, cloud and YouTube businesses. Rise in online activities across the world also remained a tailwind.
Alphabet’s business segments include Google Services, Google Cloud and Other Bets. Revenues from the Google Services business rose 63.1% year over year to $57.1 billion, accounting for 92.3% of the reported quarter revenues. Under the services business, search revenues from Google-owned sites climbed 68.1% year over year to $35.8 billion. YouTube advertising revenues rose 83.7% year over year to $7 billion, while Network advertising revenues climbed 60.4% to $7.6 billion.
Google other revenues — which consists of Google Play and YouTube non-advertising revenues — were $6.6 billion for the quarter under review, up 29.3% year over year. Total Google advertising revenues grew 68.9% year over year to $50.4 billion.
Moreover, Google Cloud revenues grew 53.9% year over year to around $4.6 billion, making for 7.5% of the second-quarter revenues. Notably, with the aggravating coronavirus situation, some industries like cloud computing have been thriving with majority of people working from home. Other Bets revenues were $192 million, up 29.7% year over year, accounting for 0.3% of total quaterly revenues.
Meanwhile, TAC was up 63.3% year over year to $10.9 billion.
Commenting on the results, Sundar Pichai, CEO of Google and Alphabet, reportedly said, “in Q2, there was a rising tide of online activity in many parts of the world, and we’re proud that our services helped so many consumers and businesses. Our long-term investments in AI and Google Cloud are helping us drive significant improvements in everyone’s digital experience.”
ETFs in Focus
The earnings results might have a huge impact on ETFs that are heavily invested in this Internet giant. Here we have highlighted four ETFs with double-digit exposure to Alphabet (see: all the Technology ETFs here).
Vanguard Communication Services ETF (VOX - Free Report)
This fund targets the communication sector by tracking the MSCI US Investable Market Communication Services 25/50 Index. Holding 116 stocks in its basket, Alphabet takes the second (Class C) and third (Class A) spot, with 11.09% and 11.05% share, respectively. VOX has AUM of $4.62 billion and charges 10 basis points (bps) in annual fees.
It has gained 0.8% since Alphabet's second-quarter earnings release. The fund has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: ETFs to Gain on Biden's Infrastructure Deal).
Fidelity MSCI Communication Services Index ETF (FCOM - Free Report)
This fund follows the MSCI USA IMI Communication Services 25/50 Index. It holds 113 stocks in its basket, with Alphabet occupying the second (Class C) and third position (Class A) at 11.22% and 11.18%. The product has amassed $921.9 million in its asset base and charges 8 bps in annual fees.
The fund is up 0.9% since the earnings results. It has a Zacks ETF Rank #3, with a Medium-risk outlook (read: Why Tech Investors Should not Ignore These ETFs).
The Communication Services Select Sector SPDR Fund (XLC - Free Report)
This ETF tracks the communication services sector of the S&P 500 Index and has accumulated $14.41 billion in its asset base. It follows the Communication Services Select Sector Index and holds 26 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.30% and 12.08% weights, respectively. The product charges 12 bps in annual fees.
The fund has risen 0.8% since the earnings release. It has a Zacks ETF Rank #2 (Buy) (read: 3 Solid Reasons to Bet on Big Tech ETFs and Stocks).
iShares Global Comm Services ETF (IXP - Free Report)
This ETF provides global exposure to companies in media, entertainment, social media, search engine, video/gaming and telecommunication services by tracking the S&P Global 1200 Communication Services 4.5/22.5/45 Capped Index. It holds 68 stocks in its basket, with Alphabet Inc. Class A and Alphabet Inc. Class C occupying the second and third position, with 12.24% and 12.02% weights, respectively. The fund has amassed $333.2 million in its asset base. Its expense ratio came in at 0.46%.
The fund has gained 0.9% since the earnings release. IXP has a Zacks ETF Rank #3, with a Medium-risk outlook.